The algorithm uses a fast of the as a buy/cover signal and a slow of the as a sell/short signal.
Backtest period = 09/17/1916 - 11/02/2015
Dow = 98 --> 17,830 = +18,094% = 5.38% CAGR
Algorithm = net profit + open P/L = +43,349% = 6.31% CAGR
Notice how the algorithm dodged both the 30s' Great Depression and the 2008 Crisis. Pretty cool huh? :)
ALGORITHM'S FORMULA (use weekly chart):
Buy/Cover = MA10(RSI10) cross> 50
Sell/Short = MA50(RSI10) cross< 50
STRATEGY TESTER'S SETTINGS:
- Initial cash = $10,000
- Pyramiding disabled
- Re-investment enabled (order size = 100% of equity )
- Trade re-calculations disabled
DISCLAIMER: None of my ideas and posts are investment advice. Past performance is not an indication of future results. This strategy was constructed with the benefit of hindsight and its future performance cannot be guaranteed.
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules. You can favorite it to use it on a chart.
//@version=2 strategy("RSI-MA Algo", overlay=true) price = close basis = rsi(close, input(10)) sma1 = sma(basis, input(50)) sma2 = sma(basis, input(50)) oversold = input(30) overbought = input(70) if (crossover(sma1, 50)) strategy.entry("MA2CrossLE", strategy.long, comment="BUY") if (crossunder(sma2, 50)) strategy.entry("MA2CrossSE", strategy.short, comment="SELL") //plot(strategy.equity, title="equity", color=red, linewidth=2, style=areabr)